Cryptocurrency Liquidity can be defined as the process by which an asset is converted into fiat currency based on demand. If you are not satisfied with this definition than liquidity can also be defined as an asset bought or sold on the open market when the price is relatively affordable.

In light of the above, discounts or even premiums cannot be attached to an asset in the process of buying or selling it. What this means is that entry and exit is possible at any point within the transaction.

The issue of liquidity is not unusual when selling an asset. There is no basis of comparison between liquid and illiquid markets. Liquid markets are deeper, meaning that traders may find it difficult to exit the market.

For instance, Bitcoin is known to have experienced exponential growth since its inception over 9 years ago. In 2009, market analysis showed that Bitcoin was just 50 units. However, the volume of Bitcoin in circulation is presently well over 13,000,000 units. Cryptocurrencies are fraught with the issue of illiquidity.

What Impacts Liquidity?

Regulations: Government regulations have seriously affected cryptocurrency. Some countries have outlawed the use of cryptocurrency, while others have passed laws to support its usage. That’s not all: some countries are indifferent towards the usage of cryptocurrency. Government regulations across the world will continue to affect cryptocurrency liquidity.

Exchanges: Due to the rising number of cryptocurrency exchanges, the number of people trading cryptocurrency has also increased significantly, leading to a surge in the frequency and volume of trading and allowing for increased liquidity

Awareness: Some people do not know about cryptocurrency and how it works. However, there are still a lot of investors, buyers, and sellers that are benefiting from cryptocurrency. Lack of awareness among investors, corporations and government institutions has limited its overall acceptance.

Acceptance: The acceptance of cryptocurrencies has largely contributed to an increase in its usage and stability. Cryptocurrencies are now being used as a means of payment accepted by online platforms and brick-and-mortar merchants. As a currency is used more and more to make payments, the currency becomes more liquid.

So How Does One Enable Liquidity?

Having identified the issue of liquidity as it relates to cryptocurrency, the next question is how to technically address this issue. Below, we will take a critical look at the solution provided by Bancor with regards to addressing this issue of liquidity facing cryptocurrencies and other currencies such as community currency and conventional tokens. Going with Bancor, liquidity can be tackled with the use of Smart Tokens.

So, how does Bancor solve the issue of liquidity with the use of Smart Tokens? Bancor gives people, companies, communities, and organizations the ability to make tokens that are autonomously convertible through the use of connectors. Connectors are essentially modules that secure the balances of other tokens as long as they are connected to the same network.

What Are Smart Tokens?

Let’s start with “What is the Bancor Protocol?”, which is regarded by Bancor as the standard which Smart Tokens operate. The following explains the Bancor Protocol.

A Smart Token is programmed with the aid of one or more connectors. These Connectors are primarily modules that secure the balances of other tokens as long as they are connected to the same network. The balances can then be used to calculate a Smart Token’s price in any connected token with the aid of the Bancor Formula. The Smart Tokens can be traded in the open market by depositing or withdrawing the amount calculated from the connector balances.

Let’s take Ethereum as an example. If a Smart Token has only one Ethereum as its connector, to buy that Smart Token, you have to send Ethereum to the contract of the Smart Token. To sell Ethereum, you have to send Smart Tokens back to the contract and then receive an amount that corresponds to the value of Ethereum.

Bancor Smart Tokens Benefits

There are several advantages of Smart Tokens over the traditional token model. These advantages include:

Continuous Liquidity: Regardless of the trading volume, conversion of Smart Tokens into other connected tokens is possible since buying and selling are continuously carried out via the smart contract.

No extra fees: There is no hidden or extra fee when converting Smart Tokens; the only fee one pays is the blockchain platform fee. This benefit is not possible in the traditional exchange model. The blockchain platform fee is known as gas when dealing with Ethereum.

Foreseeable Price Changes: The calculation of prices is made possible using the Bancor Smart Token according to the size of the transactions involved. Since transactions will make the price fluctuate from connector balances, it is possible to predict the price, leading to a more stable price.

No Spread: Unlike the traditional method of determining the price of tokens, known as an orderbook, the price of Smart Tokens is calculated using the Bancor Protocol formula.

What Are Smart Contracts?

We have been mentioning the term “Smart Contracts”. Let’s briefly explain what smart contracts are. Smart contracts are computer programs that are capable of running on the blockchain. Smart contracts are unchangeable so long as the blockchain is in operation. As they relate to Tokens, smart contracts make it possible for certain features to be programmed while some attributes are built into the token’s software directly.

Bancor leverages its ability to program Smart Tokens, thereby trading the token with other users in exchange for a connected token using the Bancor formula at an algorithmic rate. This process makes it possible for Smart Tokens to be integrated into a network system, thereby providing continuous liquidity to each token that is connected to the network, using a price that balances the trading volume in the network.

The Bancor protocol offers a solution to the problem of liquidity in cryptocurrency. This solution is made possible using a model known as asynchronous price-discovery, which leverages the Smart Token balance. This model employs a unique characteristic that enables buying and selling of Smart Tokens at any given time directly through the contract of the Smart Token. Bancor provides a website application to users instead of users having to rely on the old process of using an exchange or matching buyers and sellers to transact.

Why Exchanges Pose a Problem to Cryptocurrency Liquidity

Since price and liquidity can be obtained via a traditional exchange, aren’t you wondering if all this analysis is required in the first place? Do we even need a new solution to the problem of liquidity? It is important we carry out this analysis because traditional exchanges are mere “matchmakers” that match people with different wants.

A typical trade is made up of two opposing transactions involving one person selling what the other person needs. The reason currencies experience the problem of liquidity is that each trader tends to find another trader with opposing transactions. With this problem, it would be difficult for smaller currencies like community currency, loyalty points, and other credits to experience liquidity constantly.

Also, a lot of people like the market makers and traders, which are in one way or the other responsible for the liquidity problem, are constantly seeking ways to profit from the system.

This explains why the Bancor is making the headlines and why Smart Tokens are unique, making it possible for users to enjoy continuous liquidity with no hidden or extra fee incurred by the user. It is optional for traders or market makers to participate in the convertibility. It is pertinent to note at this juncture that Smart Tokens can also be regarded as a token that is operated by an open source smart contract.

The Bancor Protocol in Three Steps

First and foremost, it is imperative to understand the concept of Smart Tokens. They are money that is capable of holding other forms of money, provided the money is connected in its balances (via the network). In light of this, smart contracts are available to operate the tokens. A smart contract owns a portion of one other token balance. The above explanation is what is termed the initial liquidity “plug-in” connecting the Smart Token to the network. This network Smart Token allows trading of other tokens by withdrawing or collecting from sellers or buyers, as the case may be.

Secondly, trading of the smart tokens can be dynamic and operated by its handler (the smart contract) directly. The buying of a smart token is made possible by sending some portion of the tokens in the network to the smart contract. These tokens will then be added to the balance of the connector, making it possible for a new Smart Token to be created and sent to buyers.

What this means is that the supply of a Smart Token is constantly growing as its demand increases. This will also lead to a corresponding increase in its price. Generally, an increase in supply does not necessarily mean a state of inflation for those who hold the Smart Token, since demand controls the price and it is not affected by a fixed supply. On that same note, when smart tokens are sold, what happens is that the smart token will be sent to its smart contract, which then withdraws the connected token from the connector balance and then returns them to whoever is selling the smart contract.

At this point, the smart contract that has been sold will then be removed from circulation and permanently destroyed. The price will be on a steady decrease thanks to the Bancor formula which makes it possible for the decreased connector balance to be captured. This analysis can be compared to when tokens are using via the initial coin offering with a view to exchanging it with other tokens like Ether.

The third part is a realization that Smart Tokens are capable of calculating their own prices using other tokens that are connected to a shared network. This is made possible using the Bancor Formula, which holds the ratio between Smart Token market cap and the connector balances constant. As trading occurs, there is a sharp addition and subtraction in the tokens, thereby causing the price to fluctuate and making the ratio constant.

The constant nature of the ratio is also known as “weight”, which is also referred to as the Smart Token’s creator. The whole process ensures that buying and selling are at equilibrium since the price is high when the token is bought and the price also drops when it is sold. Just like the principle of supply and demand in economics, price is calculated as a mathematical function (Smart Token and connector balances) since price can adapt with the demanded smart tokens.

Bancor Token Generation Explained

Within three hours, the project of liquidity network blockchain netted about $153 million in Ether. This amount made the project one of the most successful token launches in 2017, as reported in this Forbes article about Bancor. At the event of the token generation, there were over 390,000 Ether generated, making it a world record at the time. The event took place on the 12th of June, 2017.

According to Bancor Network Token (BNT), smart tokens will be added with new features in the next 2 years. These features include security upgrades like account recovery, purchasing smart tokens with a credit card, empowering communities to easily use the token without necessarily having the technical know-how, moving the liquidity network completely to a blockchain, and making it possible to decentralize the system. Also, in the next 2 years, there will be a launch of Bancor grants which empower any community to be connected to the Bancor network through the Smart Token connector balance.

Since the launch of the Smart Token, Bancor has made it possible for its token to be activated and it has launched its relay token for over 20 ERC tokens, which are currently convertible through the network. Bancor has also launched their web app on both mobile and desktop platform while deploying a unique widget that will enable users to comfortably convert their tokens irrespective of their location.

Bancor Network Token holds Ether as its primary token connected to its network, hence making it possible for the conversion of tokens to Ether, so long as the token is connected to the Bancor Network There won’t be any need to match buyers and sellers. As it stands now, this feat is a great achievement in the world of blockchain. Bancor is single-handedly driving a technology that will provide a solution to the problem of liquidity while creating cryptocurrencies that are intrinsically liquid.

Summing it All Up

Bancor has successfully discovered a new model – without relying on the traditional method of buying and selling tokens, Bancor is reinventing liquidity. This method is made possible through the use of smart contracts that are currently available on the Ethereum network. This model allows balancing at all times other connected tokens. The Bancor model makes use of a simple formula to calculate and recalculate the price of Smart Tokens that is convertible at any point on the network for any of its connected tokens.

The Bancor model replaces the traditional method of determining price. Previously this required a highly labor-intensive process involving “matchmaking” before a trade could be carried out. The model offers a lot of functions such as decentralization, improvement in efficiency, transparency, stability for the emerging cryptocurrency, and accessibility in a dynamic economy.

Do you think that Bancor is the solution to the challenge of liquidity in the cryptocurrency marketplace? Let us know what you think in the comments below.

The 58 billion yen worth of XEM tokens are on the move, according to the NEM Foundation, but no attempt to sell them on exchanges has been made as of Wednesday.

Some 500 million XEM were stolen from Japanese cryptocurrency exchange Coincheck last week in what some observers have called the largest exchange hack to date. However, despite reports to the contrary, those behind the attack have not yet tried to sell them, according to a statement released by the Foundation Wednesday morning.

"None of the stolen funds have been sent to any exchanges. As long as those funds are off public exchanges they will be very difficult to liquidate, especially in large amounts," the group stated.

Reuters had previously reported that NEM Foundation vice-president Jeff McDonald had said the hacker or hackers had started trying to move the stolen tokens to six different exchanges in order to sell them.

However, this information was not entirely accurate, NEM Europe promoter Paul Rieger asserted. In an email to CoinDesk, the NEM Foundation subsidiary member said:

"There were eleven 100 XEM transactions from one of the hacker accounts to “random” accounts. Nothing was sold. There were also no attempted transactions to exchanges."

Reiger had previously told CoinDesk that his group was tagging accounts containing stolen XEM. His team also helped develop a system to automatically flag any stolen XEM, as well as the accounts they appeared on.

On Wednesday, The Japan News reported that the stolen XEM was transferred to 20 different accounts over the course of five days, with a series of transfers on both Jan. 26 (Friday) and Jan. 30 (Tuesday). The newspaper further stated that the Metropolitan Police Department was investigating these transfers as a possible attempt at slowing the investigation into the actual hack.

The Japan News further claimed that nine different accounts each received at least 11,000 yen.

It is unclear where The Japan news received its information from. The NEM Foundation declined to confirm the report's claims.

In its statement, the NEM Foundation noted that it would be difficult for the hacker to liquidate most of the stolen XEM, and the token's developers were continuing to monitor the accounts regardless.

Though news of the theft did not have a major impact on XEM's price, news that Coincheck would reimburse its investors for their stolen funds sent the coin's price to a local high of $1.22. However, it has since begun dropping again, falling to about $0.76 as of press time amidst a wider crypto bear market.

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.

Tokyo-based SBI Holdings has announced that its digital assets exchange, SBI Virtual Currencies, which launched in beta yesterday, will list Ripple (XRP) as the only cryptocurrency supported at launch.

XRP is the first and the only cryptocurrency to be listed on SBI Virtual Currencies during its initial launch period. The newly released digital asset exchange, owned by SBI Holdings, is designed to streamline cryptocurrency trading for its institutional customers and individuals in Japan. The company originally proposed its plan for launching the exchange in late 2016 but at the time had not disclosed either the release date or which cryptocurrencies would be supported.

SBI VC is among the first group of companies to apply for and receive Japan’s digital currency exchange license in November 2017. Additionally, the recent formation of a consortium of Japanese brokerages, headed up by SBI Ripple Asia, will make Ripple’s payment protocol accessible across the Asian region.

According to an official announcement, Yoshitaka Kitao, SBI Holdings CEO and Executive Chairman, sees solid potential in XRP. During a discussion in August 2017, Kitao said:

Not only does it have a clear use case, XRP is faster, cheaper and more scalable than any other digital asset,” Mr. Kitao said. “I strongly believe it will become the global standard in digital currencies.

Yoshitaka Kitao, CEO and Executive Chairman of SBI Holdings

The Relationship Between SBI Virtual Currencies and xRapid

Ripple’s xRapid enables payment providers and financial enterprises to justify on liquidity cost and customer experience. Taking a note from an announcement, SBI VC will also associate with the xRapid ecosystem. As a result, Ripple is spilling easier conversion of XRP and JPY for banks, payment providers and individuals to transfer money into or out of Japan.

In regards to the partnership, Patrick Griffin, Ripple’s senior vice president of business development confidence that the partnership will benefit company’s mission. According to Mr.Griffin, a motive behind the alliance is to rationalize the flow of money – “Establishing an Internet of Value.”

He further acknowledges:

Today’s decision to make XRP the primary digital asset of SBI Virtual Currencies shows the utility, efficiency, and scalability respected financial institutions around the world see in XRP. This is a critical step forward in our mission to build XRP liquidity and build an Internet of Value

Ripple’s Success and the Power of Liquidity

Ripple was easily one of 2017’s standout cryptocurrencies. It started out the year trading at around $0.006 – six-tenths of one cent – and began a slow but steady climb until in Q2 it peaked at just under 40 cents per coin. From there XRP continued trading between $0.20 and $0.30 until December. During that month, Ripple rose from $0.245918 to a then-all-time high of $2.78 on December 30 – an increase of more than 1000%. The upward trend continued through the beginning of January, with prices reaching an all-time high of $3.75. Even with the recent decline in the cryptocurrency market, which saw XRP prices drop to a low of $1.03 before starting to correct, Ripple still remains one of the best performing digital assets to date.

In an interview with Fortune magazine in October 2017, Ripple’s CEO Brand Garlinghouse stated:

The liquidity needs of banks today is managed with literally ten trillion of float that sits in these nostro and vostro accounts. We believe very strong this is an inefficient model. You can use digital assets to fund liquidity, and Ripple is uniquely positioned to capitalize on that. Bitcoin takes four hours to settle a transaction. XRP takes 3.6 seconds.

With a similar mission in hand, SBI Holdings and Ripple will have a great year ahead. It remains to be seen how the listing will affect Ripple’s price. At press time, XRP was trading at $1.13 according to CoinMarketCap.

What do you think of Ripple’s big announcement? Will news of the exclusive listing result in significant gains for XRP? Let us know in the comments below.

The cybercrime combating department of Ukrainian Police has voiced support for the legalization of cryptocurrencies despite sharing some concerns about them. The Cyberpolice unit also noted the need to regulate cryptos “as soon as possible”. Ukrainian parliament is yet to adopt newlegislation amid mounting calls from other institutions to regulate cryptocurrencies.

Legalize it or Ban it

It is necessary to regulate at legislative level all matters pertaining to the use of cryptocurrencies, Sergei Demedyuk, head of the Cyberpolice department, said in a statement quoted by local media. In his opinion, regulations should be adopted as soon as possible. He also pointed to the need to amend the law in order to tax crypto related transactions. The rules of operating cryptocurrency exchanges have to be determined, too, he insisted.

If authorities are unable to regulate the status of cryptos in the near future the state should officially ban their circulation, the National Police representative said. Then “everyone will know that by buying and selling cryptocurrency in Ukraine they risk losing their financial investments irrevocably, in the absence of any protection or compensation”, Demedyuk warned.

The high-ranking police official noted, however, that Ukraine’s Cyberpolice force was supportive of efforts to legalize cryptocurrencies and crypto mining in the country, despite concerns that their circulation might be “based on the same foundations as financial pyramids”.

Mounting Calls to Regulate

Demedyuk’s remarks are part of a long list of calls to legalize cryptocurrencies in Ukraine. His comments came after a study revealed that dozens of Ukrainian officials possess a total of more than 21,000 bitcoins, as news.Bitcoin.comreported.

Earlier this month the status of cryptocurrencies was discussed during a meeting of the National Cybersecurity Coordination Center in Kiev. Representatives of the security services took a closer look at the “uncontrolled circulation” of cryptos in Ukraine. The cybersecurity body decided to set up a special working group to complete the legal framework. It should assist other authorities in building foundations for the crypto market, establishing procedures to monitor transactions and clarifying aspects of taxation.

The Secretary of the National Security Council of Ukraine Oleksandr Turchynov said that the development of the cryptocurrency market could not be left unattended. The Minister of Justice of Ukraine Pavel Petrenko stated that Bitcoin must be brought into the legal field adding that government institutions should respond to the phenomenon. A petition to the president to legalize cryptocurrencies was filed on January 12.

While The National Bank of Ukraine remains opposed to cryptocurrencies, legislators have introduced two bills to regulate their status. The drafts have been advancing through commissions in the Rada since October. One of them aims to regulate the circulation of cryptos, and the other is designed to stimulate the cryptocurrency market and the trade of crypto derivatives. Proposed amendments to the tax code cover taxation aspects, with possible incentives for mining companies. The legalization of bitcoin, however, can take many more months, as the government must prepare subordinate statutory instruments to implement the law.

Do you think Ukrainian deputies will speed up the process of adopting cryptocurrency regulations after multiple calls by other Ukrainian institutions? Tell us in the comments section below.

Hardforks in the Bitcoin system don’t surprise anyone anymore, but the Ethereum fork, carried out simultaneously with the ICO conducted by the e-Chat team is really something revolutionary for the entire crypto-community.

The thing is that the project has long outgrown the limits of the usual blockchain-based messenger and transformed into an interesting, self-developing start-up.

The e-Chat team decided to transform the messenger into a multi-functional platform where any participant or business can create their applications based on the e-Chat platform, as well as create their own tokens to pay for services provided both inside the application and outside it. A wide range of services will be available, from a taxi to a babysitter in the neighborhood. Similar functionality exists in the WeChat application, but the degree of protection in it leaves much to be desired, and all payments are possible only in fiat currency. At the moment, the only competitor to the e-Chat project may be Telegram, which launches the ICO in March 2018, but it will happen only in March, and the guys are conducting ICO already now.

Ethereum – e-Chat fork, can be held in early March. Making such an uncompromising step, the team of e-Chat mobile blockchain platform has 3 goals:

improvement of the Ethereum network;

additional benefits for investors;

instant attraction of a large number of new users and developers to the platform.

Why Is It Profitable for Investors?

The situation is not standard since the futures trading of the ECHT coin will soon be launched on some crypto-exchanges, which will provide a benchmark for traders. All issues of converting ERC-20 tokens into fork coins will be determined by the voting of investors.

The approach of the team that appeared on the ICO with an already running application is indicative, which is gaining in popularity both among ordinary users and popular bloggers, such as: Xenia Sobchak (presidential candidate in Russia in 2018), Jay Alvarrez (an extremely popular Travel blogger, 6 mln subscribers), Victoria Lopyreva (Ambassador Of FIFA WC 2018) and many others.

At the moment, e-Chat has launched a vote among investors in order to determine the further development path of the project, the team will change the concept in case if the majority of investors vote for the fork.

All details can be found on the official website and in the social networks of the project.

The heads of the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (SEC) are set to testify on cryptocurrencies during a U.S. Senate hearing next week.

The Senate Committee on Banking, Housing, and Urban Affairs will meet on Feb 6. at 10 a.m. EST, with SEC chief Jay Clayton and CFTC chief J. Christopher Giancarlo set to appear as witnesses. The hearing and the appearances by Clayton and Giancarlo were previously reported by the Washington-based publication The Hill earlier this month.

The hearing – entitled "Virtual Currencies: The Oversight Role of the U.S. Securities and Exchange Commission and the U.S. Commodity Futures Trading Commission" – comes amid a period of heightened activity at both agencies around the topic.

The SEC has filed a number of lawsuits in recent weeks against allegedly fraudulent initial coin offerings (ICOs), while, as reported yesterday, the CFTC has moved to scrutinize the activities of cryptocurrency exchange Bitfinex and Tether, the closely-linked company behind the controversial USDT token.

Next week's hearing notably follows the publication of a joint op-ed from Clayton and Giancarlo. The article, published by the Wall Street Journal, served as both a pledge to apply closer oversight of the industry as well as a warning to some – particularly those soliciting investments.

"Market participants, including lawyers, trading venues and financial services firms, should be aware that we are disturbed by many examples of form being elevated over substance, with form-based arguments depriving investors of mandatory protections," the two wrote.

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.

BitCar is targeting high-end cars as they’ve historically had much lower price fluctuations than cryptocurrencies. Our feedback has been that one immediate use of the BitCar platform is as a place of stability in times of crypto market volatility.

Developing a mechanism for returning asset appreciation to owners will be the second phase of platform development.

The highly focused Blockchain platform could be a game changer for the global car industry, beginning with exotic vehicles.

BitCar Executive Charles Kilborne added:

BitCar is aiming to become the main cryptocurrency for the automotive industry, which is a sector that has yet to see any disruption from Blockchain technology, despite car ownership falling as ride sharing rises. We are already planning applications in this shared economy, autonomous vehicles and in related internet of things applications.

BitCar has recently announced partnerships with crypto car traders including UK-based Dadiani Syndicate who recently sold F1 cars to Chinese investors paying in Litecoin, as well as crypto car trader Moonlambos.

Dr. Van Ek said:

Moonlambos has advised us it plans to accept BITCAR tokens to purchase exotic cars, so we are already emerging as the car industry’s payment coin. We are all highly motivated and excited about BitCar’s potential.

The BitCar technology platform has been in research and development for over two years with a functioning prototype.

Dr. Van Ek said:

We have a proven track record in this Blockchain innovation space. Our passion is conceiving and executing on disruptive technology that improves traditional business models, by using Blockchain technology. BitCar was conceived and developed over a relatively long time and ticked all our boxes.

BitCar is working with ASX-listed DigitalX – advisor to Bitcar for the ICO.

According to the self-proclaimed “first major payments company to support Bitcoin payments,” lengthy transaction times and high failure rates have made Bitcoin payments anything but convenient, and the rapidly fluctuating price of the cryptocurrency creates headaches for businesses. Worse yet, high fees make Bitcoin transactions about as costly as bank transfers.

Because of this, we’ve seen the desire from our customers to accept Bitcoin decrease. And of the businesses that are accepting Bitcoin on Stripe, we’ve seen their revenues from Bitcoin decline substantially. Empirically, there are fewer and fewer use cases for which accepting or paying with Bitcoin makes sense.

Adding insult to injury, even The North American Bitcoin Conference in Miamistopped acceptingthe titular cryptocurrency as a means of payment, due to high network fees and slow transaction times.

A Problem Not Easily Solved

The root of Bitcoin’s payment issues stems from the cryptocurrency’s reliance on miners.

Miners confirm transactions and are compensated with new Bitcoin. However, the maximum number of Bitcoins ever allowed to exist is capped at 21 million—a number rapidly approaching. When no new Bitcoins may be created, miners will need to be compensated purely via transaction fees, which doesn’t bode well for the cost of future transactions.

However, one potential solution to Bitcoin’s sluggishness may come with the successful implementation of the Lightning Network—which aims to make transactions both instantaneous and cheap.

If successful, the Lightning Network could help Bitcoin gain serious ground as a viable currency.

Digital Gold

Though Bitcoin’s prospects for everyday use have been called into question, the cryptocurrency is still looking attractive as a store of value.

Bitcoin currently occupies a space as “digital gold” – and just like physical gold, its value doesn’t come from its usability. Just as you wouldn’t buy a Starbucks latte with gold shavings, nor should you with slow and expensive Bitcoin.

There’s a reason we use paper currencies for everyday transactions: it’s easy. Bitcoin isn’t, and there’s a small chance it never will be.

Bitcoin is, however, an interesting investment choice for those looking to store and potentially grow their wealth – not entirely dissimilar to stocks or real estate. Just as physical gold exists as a valued investment based solely on the belief that it will always have value, so too does Bitcoin carry value in its scarcity.

At its very core, Bitcoin is everything inflationary fiat currencies are not. At the moment, that means it isn’t quick and easy – but the day may come when it truly is the best way to pay.

[Disclaimer: the author of this article is a holder of Bitcoin (BTC)].

What do you think of Bitcoin’s prospects as a viable method of payment? Have you ever paid for anything with Bitcoin? Let us know in the comments below!

The state of Hawaii is planning to regulate the use of bitcoin and digital currencies that would require licensure to transmit cryptocurrency-based funds. Two bills introduced by a group of partisan Hawaiian lawmakers are focused on digital currencies as a monetary instrument under the state’s Money Transmitters Act.

New Definitions Applied to the Hawaiian Money Transmission Act

Last week Hawaiian bureaucrats reviewed a proposed bill, HI SB3082, that aims to tether regulatory policies to digital currency transmitters. The proposed law adds new definitions like “virtual currency exchanges, transfers, and storage.” The bill will apply to anyone credited with virtual currencies, moving them, relinquishing control, and any use tied to a medium of exchange if passed. The laws will recognize bitcoin as a “permissible investment and statutory trust.” Although, if the statutes does pass, anyone who plans to transmit bitcoin and other forms of digital assets must apply for licensure.

Hawaii’s Virtual Currency Transmission Requirements

Last year Coinbase left the state of Hawaii due to the state’s proposed laws which would require licensed virtual currency transmitters to hold USD reserves. The recently submittedSB3082has changed this requirement for specific qualified trading platforms. Applicants who want to apply for virtual currency transmission will be required to reveal a lot of information like the applicant’s name and principal address, prior criminal convictions, a description of the business activities, sample of the virtual currency instruments or products, and the name and address of the clearing banks involved. Further, for each virtual currency sale, exchanges must provide its customers with some form of a receipt.

“Each licensee who receives money or monetary value for transmission and the licensee’s authorized delegates shall provide a receipt to the customer that clearly states the amount of money or equivalent value presented for transmission and the total of the fees charged by the licensee,” explains the proposed bill.

Hawaii’s SB3082: “These Currencies Are Not Backed”

One notable section describes virtual currencies as based upon computational cryptography and derive their value “solely from the market’s perception of their value.” Hawaii’s SB3082 states:

[Virtual Currencies] can experience great swings — These currencies are not backed by backed by any physical commodity, such as gold or silver; not backed by the United States or any other national government; not legal tender for debts; and are not insured by the Federal Deposit Insurance Corporation or any government.

The bill further details that consumers can lose all their cryptocurrencies through many attack vectors. “Computer failure; malicious software attack; an attack, closure, or disappearance of a virtual currency exchange company; lack of security; loss of your private key; or a sudden or dramatic change in value” are just a few examples explains the SB3082 text. The bill further notes:

Some virtual currency users have been unable to access their legitimate virtual currency account because of heavy traffic by other users or a prevalence of criminal activity in virtual currency use — To protect yourself, become educated as to the potential risks before deciding whether you want to transact in virtual currency.

Hawaiian officials will have a public hearing on SB3082 on February 2, 2018, at 9 am. The newly reformed money transmission act passed its first reading on January 26.

What do you think about the new virtual currency definitions that aim to be applied to Hawaii’s money transmission act? Let us know your thoughts in the comments below.

The initial coin offering (ICO) for the Kodak-branded cryptocurrency, dubbed KodakCoin, has been delayed.

The public sale was originally supposed to launch on Jan. 31, as previously reported by CoinDesk, following a pre-sale during which 8 million KodakCoins were sold.

Per the statement, the delay is being attributed to an extended process of verifying that those trying to invest are actually accredited in the U.S., meaning that they have a net worth of more than $1 million or an income of at least $200,000.

The statement continued:

"Given the large interest in the KODAKCoin ICO and the steps that we need to take to verify the 'accredited investor' status of each interested investor, we expect this process to take several weeks."

The project is the result of a deal between Kodak and WENN Digital, and is intended to serve as the underlying token for a decentralized photo rights management platform (and as pointed out by Ars Techina, the project appears to be traced to an earlier, similarly-structured project called RYDE coin).

Kodak's pivot to blockchain led to rumors that the company was trying to take advantage of the current investor atmosphere around other firms, many of which have seen their stocks double or triple after announcing pivots related to the tech. The U.S. Securities and Exchange Commission said last week that it plans to scrutinize such moves more closely.

Market data shows that, in the wake of the delay announcement, Eastman Kodak Co. share prices have fallen. Per Google, the stock's value is down more than 15% as of press time.

The Jan. 31 statement also warned investors against fake KodakCoin ICO pages appearing on Facebook and other websites, and that investors would not be able to purchase tokens outside the company's official platform.

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.

Digital payments company Square is rolling out the ability to buy and sell bitcoin to more users of its popular Cash App.

The company announced today that, following news last year that it was testing the feature with a limited number of users, the option is being expanded further. That said, users in the U.S. states New York, Georgia, Hawaii and Wyoming – which have more restrictive regulations around the brokering of cryptocurrencies – won't be able to access the option just yet.

The app allows users to send payments to their friends and family, though notably, they may not be able to share funds to generic contacts on their phones.

"We support bitcoin because we see it see it as a long-term path towards greater financial access for all. This is a small step."

In addition to the bitcoin integration, the company also released a dedicated web page explaining bitcoin and how its underlying technology works.

Cash App image by Brady Dale for CoinDesk

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.

The crypto world, with all its freedom, risks and rewards, seems like something out of a western. Within this wild west-like world, see seeing a company committed to transparency and accountability to its community is a rare treat. But there are some who do it.

If you missed the news, Cointed (a major crypto ATM provider and exchange) has just released its Transparency report. In it, you can find everything about their company structure, ownership as well as get the details surrounding their different businesses.

Here, we’ll highlight the things you MUST check out from the report. If you want to learn about the company structure and ownership, check out this article.

Want to learn more about Cointed and the future of money? Check out our full profile of one of the hottest crypto players out there!

Crypto ATMs

Cointed own a total of 120 crypto ATMs located in Austria, Italy, Hungary, Spain, Lichtenstein, Bangkok. They have two models: a One-Way and a Two-Way machine.

One way devices are mostly produced by ex-partner company General Bytes and the second are in-house developed.

Around 90 of them are one-way and are produced by partnering companies. The remaining are model X. Cointed is overhauling their already established network by gradually replacing their one-way machines with the proprietary two-way model X.

Also, the team is working on nine new prototype machines.

If you are among those worried about the beef with General Bytes, in the report you can find attached all of the documentation surrounding this partnership and have your own take on the situation.

Online Exchange

Currently, the Cointed exchange has more than 25.000 registered users and since October their revenue is doubling every month.

10 doesn’t sound like a lot, but for an exchange that operates with fiat money, it is pretty impressive. Coinbase, one of the largest fiat crypto exchanges offers only 3 different types.

Three different fiat currencies are accepted: Euros, US dollars, and Swiss Francs. Soon, Turkish lira will be accepted too. Clients also get to choose from 4 different paying methods: card, wire transfer, PayPal or MoneyGram.

Note that all clients undergo Know Your Customer processes and must verify their identity to use the exchange.

Attached you can find the provisional profit or loss account and preliminary balance sheet, both created by Deloitte Austria.

Green Mining

For Cointed, it wasn’t news, though. They’ve been working on green mining from the go.

They offer two types of mining contracts. The first option is: you buy the hardware, and Cointed brings it to you. Second option: buy the equipment but leave it at Cointed’s vast green mining facility in Sweden.

Why leave it at Cointed’s? For a small hosting fee, you get full maintenance and support, while also enjoying the cheap renewable energy the plant uses. It’s like leaving your car at the mechanic and still being able to drive it to work.

Graphic Card Suppliers Nvidia is known for their closed development process when it comes to their GPUs design.

However, for business clients, they provide the option for customization. The report includes documentation of the deal, like invoices, order initiation and the non-disclosure agreement (NDA) between the two companies.

Currently, we cannot share details about these cards’ specs. The specific aspects and capabilities of this card are a product of extensive research and development, this is why Cointed and Nvidia decided not share them.

The design of the GPUs will be optimized for mining. Also, specifications and all hardware aspects are designed to work together with Cointed’s proprietary software, customized cases, and rigs.

Sapphire is the second of Cointed’s GPU suppliers. They are providing 10,000 Radeon RX 470 Mining Quad UEFI 4GB. More than 3,000 of these are already operating at Cointed’s facility.

The documents surrounding these deals, like invoices, specifications of the Unity Miner, and the hosting agreement are all in the report.

PayCo

PayCo is a payment interface that can be integrated into POS and other payment processing systems. The biggest perk of this product is that it allows the immediate exchange of the payment from crypto to fiat.

This lets the client pay with bitcoin and merchants receive USD or any other of the currencies that the Cointed online exchange supports. Of course, merchants may choose to receive the payment in crypto too.

Currently, the interface is still in beta phase. Cointed is aiming to release it to the public by Q2/2018.

Cointed’s project truly stands out in the field of ICOs.

Their commitment to accountability to their community is commendable and rare in the crypto field. So, do not miss out on your chance to become part of the future of money. The token will be listed on an exchange and we will soon update you with the details.

Only a month left from the ICO! Do not miss out on Cointed and also on the hottest Bitcoin News!

A South Korean court has ruled that bitcoin has an economic value for the first time. This overturned an earlier court ruling which did not recognize the digital currency. The case involves the confiscation of 191 bitcoins.

Bitcoin’s Status Re-Examined

The Suwon District Court in South Korea has, for the first time, recognized that bitcoin has an economic value and can be confiscated, local media reported on Tuesday.

The ruling concerns the case involving Ahn who was arrested in May of last year and convicted of operating an illegal pornography site with approximately 1.2 million members. Ahn pocketed 1.9 billion won (~USD$1.78 million) in membership fees. While arresting him, the Southern Gyeonggi Provincial Police Agency confiscated his 216 bitcoins from an online wallet which received some fees from the site.

In September of last year, the court did not recognize bitcoin and ruled that it could not be confiscated, as news.Bitcoin.com previously reported. An official from the court explained that they did not judge bitcoin to have any economic value because it is “in the form of electronic files without physical entities, unlike cash.”

Landmark Court Ruling on Bitcoin

Following the first ruling, the prosecutor appealed in December to the court for the ability to confiscate bitcoins. The second hearing was held recently.

In the second hearing, the court found that “The crime profit concealment law does not restrict the criminal income to the goods but the cash, the deposit, the stock, and other property with economic value,” Chosun reported and further quoted the court explaining:

Bitcoin can be changed into money through an exchange. It can be used as a means of payment through merchants, so it should be regarded as having economic value.

The court subsequently ruled that “Among the 216 bitcoins confiscated by the prosecution, Ahn’s 191 bitcoins” were traced to email addresses of the pornography site members, so they are “recognized as criminal proceeds from the operation of the site.”

Since Ahn’s arrest in April, the price of bitcoin has risen significantly. The 191 bitcoins are worth approximately 2.13 billion won (~$2 million) at the time of this writing based on bitcoin’s price on Bithumb, one of the country’s largest cryptocurrency exchanges.

Maekyung quoted a lawyer explaining:

The recognition of virtual currency as an object of forfeiture means that it will be transferred to the national treasury and used as a national budget.

What do you think of the new court’s ruling? Let us know in the comments section below.

Harunustaspor, a Turkish amateur football team, just bought a player using bitcoin.

The Bitcoin space might be struggling from a price and a sentiment perspective right now but that hasn’t stopped the flow of quirky news that’s become prevalent over the last six months or so, as the cryptocurrency and blockchain spaces have moved out from under the radar and into the mainstream.

The latest report of this type has come out of Turkey, which (as many reading will likely already be aware) has had something of a turbulent relationship with cryptocurrency over the last few months.

The BBC reported today that a Turkish football (soccer, for our North American friends) club has signed a new player using bitcoin.

At the top tier of football in Europe, when a club says they have acquired a new player through purchase or transfer, it normally means that the club in question has paid another club for the player that’s being transferred.

That’s not the case here, however.

We’re talking lower league teams – specifically, the Turkish amateur league – and the transfer and acquisition fee refers to the club having paid the player the funds in an attempt (and, as it seems, a successful one) to get him to join the ranks.

Specifically, the team is called Harunustaspor and the player who has been bought is a 22-year old footballer named Omer Faruk Kıroglu.

A Combination Of BTC And Fiat

As per the reports, Kıroglu has picked up 0.0524 BTC (which amounts to a little over $520 at current pricing) and 2,500 Turkish lira (around $665 right now) to join the club, which competes in the Turkish Sakarya First Division Group B.

And the club hasn’t been coy about the justification for the decision to pay BTC for Kıroglu.

Here’s what club chairman, Haldun Sehit, said about the move:

We did it to make a name for ourselves in the country and the world.

And, to give credit where credit is due, it’s working.

The news is being reported across the globe through numerous top-tier outlets and is likely introducing not just this team, but the league in which it plays, to a brand new global audience.

Whether Harunustaspor will pick up any new fans on the back of its dabble with bitcoin remains to be seen.

Do you know this team? Does crypto have a place in sport? Let us know below!

This is a paid press release, which contains forward looking statements, and should be treated as advertising or promotional material. Bitcoin.com does not endorse nor support this product/service. Bitcoin.com is not responsible for or liable for any content, accuracy or quality within the press release.

Blockchain revolution is happening. Sure, we are in first days yet, in “stone age” of cryptocurrency. Nevertheless, practical business solutions are already emerging. One of the most known and functional is Ethereum blockchain.

Ethereum not only enables online payments; it is also capable of running any decentralized application’s programming code. As such, it can greatly help businesses by making transactions more efficient. Here are some of the ways it does so:

Ethereum ensures data security and accuracy

Ethereum keeps business transactions secure as they are encrypted and employed in a closed peer-to-peer system. This ensures that they are protected from fraud, theft, and privacy violations.

In addition, Ethereum provides a system for the accurate maintenance of records. It prevents them from being modified after they are added to the ledger and it adds a timestamp, making the ledger more reliable and accurate than databases and spreadsheets. This in turn enables the company to earn the trust of both their employees and clients.

Ethereum makes it easier for businesses to increase their reach

With Ethereum, businesses are able to save on the costs incurred from sending and receiving payments from other countries. They are also able to minimize the delays that are usually experienced with international transactions, in turn making more people and companies want to work with them.

Ethereum makes it easier to form agreements

Unlike traditional contracts that must be notarized, Ethereum enables the creation of smart contracts without the need for middlemen. These smart contracts define and enforce the terms and penalties that come with the agreement.

How to Integrate Cryptocurrency Payments into Your Business

There are indeed many benefits to enabling cryptocurrency payments into your business. It ensures that your transactions are kept secure and accurate. It allows you to save on costs, particularly when making or receiving payments from other countries, as well as on the costs incurred from middlemen. In addition, it enables you to create smart contracts, which helps ensure the enforcement of business agreements, in turn preventing business conflicts. In summary, cryptocurrency use can help you provide better customer service and can give you a competitive advantage.

There are many platforms that will allow you to integrate cryptocurrency payments into your business. You just need to sign up for a merchant account at your chosen cryptocurrency wallet. However, the manner by which businesses use cryptocurrencies today tend to inconvenience users. The underlying issues can be easily improved, though, and this is what BCShop.io offers.

BCShop.io is an innovative platform for e-commerce and e-payments where one can offer products and services in exchange for cryptocurrencies: Ethereum and tokens. It also provides an easy-to-use interface so that even cryptocurrency newbies will have no difficulty learning about and using the platform.

If you want to try and get a feel of using Ethereum payments for your business, then you can do so at public testnet version: https://testnet.bcshop.io/ for free. As an example, several business cases were already implemented, bitcoin.com and ICOAlert.com are worth to mention among others. For more information, visit https://bcshop.io/.

This is a paid press release. Readers should do their own due diligence before taking any actions related to the promoted company or any of its affiliates or services. Bitcoin.com is not responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in the press release.

Lawmakers in Arizona have advanced a proposal that would allow residents in the state to pay their taxes in bitcoin.

CoinDesk reported earlier this month that a proposed law before the Arizona legislature would, if approved, let taxpayers make their payments in bitcoin or other cryptocurrencies. The bill was submitted on Jan. 9.

"The Department [of Revenue] shall convert cryptocurrency payments to United States dollars at the prevailing rate within twenty-four hours after receipt and shall credit the taxpayer's account with the converted dollar amount," the text of the bill reads.

Public records show that last week, the Arizona Senate Finance Committee had given the thumbs-up to the measure by a 4-3 margin. The bill remains before the chamber's Rules Committee, though the endorsement of the Finance Committee – which encouraged that the bill is passed – increases the likelihood that the measure will succeed.

Speaking with local media outlet ABC15, state senator and bill author Warren Petersen remarked that it came as a result of input and requests from his constituents.

"Since I've started to work on this, I've been surprised how many people are holders of cryptocurrency, so probably more than you'd suspect," he told the outlet.

Image via Shutterstock

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.

Italy's economy minister struck a critical tone on cryptocurrencies Wednesday, remarking during an event that damage could arise should a market bubble "explode" even as central banks eye the technology.

Speaking during an event at the Polytechnic University of Milan that was organized by energy giant Enel (which itself has trialed blockchain for energy trading purposes), Economy Minister Pier Carlo Padoan joined the growing chorus of government officials who have decried the price developments around cryptocurrencies in recent months.

"The oversight authorities are ever more active and the central banks are weighing whether to use cryptocurrencies but then, if the phenomenon explodes, they can do harm," Padoan remarked, according to a report from Ansa Business.

The publication also quoted Padoan as saying that the issue isn't strictly technological, but rather a consequence of how it's used.

"Blockchain is a technology and technology is one thing, and the use you make of it is another," he told event attendees. "The problem is not the technology but the behavior".

Speculation around cryptocurrencies has caught the attention of Italian regulators in the past, including its tax office, which in late 2016 moved to treat bitcoin as a kind of currency for tax purposes.

Market watchdogs have also targeted local promoters of the OneCoin investment scheme, which has been widely accused of being a Ponzi scheme, ultimately issuing a 2.59 million euro fine last August.

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.

If you are looking to get into the cryptocurrency mining game or you have a special project that requires additional hashing power, Rent A Hash is the kind of service you are looking for.

Rent A Hash is a professional mining platform that allows you to rent hashing power as it becomes available on the platform for the period of time you need to achieve your goals. You will not have to deal with setting up rigs, importing machines or GPU cards, renting and maintaining warehouses, securing the site or paying the bills. You can get all the advantages of having a rig without the work involved with a reliable hash power supplier.

How Does Rent A Hash Work?

Login and start looking for the kind of rig you would like to rent from the list.

You can organize your search according to several categories, including speed, price per day and price per GH per day.

Once you select the rig you want to rent, the platform makes it easy for you to pay the fees and start getting your returns.

Quick Payments, Low Fees

Beyond the logistics, the technical know-how and the upkeep work you will avoid by renting a rig, Rent A Hash is an excellent entry point for anyone who wants to get started in mining because its prices are low. Fees are also low, since Rent A Hash used Bitcoin Cash for its payments. The use of BCH also means that payments will go through quickly.

Security and Scalability

Rent A Hash is also focused on keeping your funds safe. All the funds are kept in cold storage, making Rent A Hash exponentially safer than its competitors. Additionally, the Rent A Hash platform was designed to scale operations up as soon as more rigs are available for rent and demand for rigs goes up.

So, if you are looking to experiment, you want to get into the mining game or you have a large project that requires a lot of mining power, Rent A Hash is a great option to get what you want without a hassle. Visit our site, take a look at all the options, find the one that fits your needs, register and start mining with Rent A Hash.

Nicolas Maduro, the president of Venezuela, has said the pre-sale of the country's proposed cryptocurrency – the "petro" – will launch next month.

Signing the petro white paper on Tuesday, Maduro stated that the initial sale of the token will commence on Feb. 20th. President Maduro also revealed that plans are being drawn up to use the petro – which is backed by commodity reserves, including oil – with a national ID card possessed by millions of Venezuelans, a Bloomberg report states.

Maduro further announced that mining centers are being setup at educational institutions to produce the token. This apprently has been revised from an initial draft proposal that the petro was supposed to be pre-mined before launch.

Maduro stated on state TV, according to Bloomberg:

"The petro will have a great impact, in how we access foreign currencies for the country and in how we obtain goods and services that we need from around the world."

The controversial token was announced back in December of last year, with the declared aim of bypassing financial sanctions.

The country's opposition-run congress soon after declared that petro is "illegal" and that it would be effectively borrowing against the country's oil reserves. As such, the move would violate laws that specify the legislature must approve government borrowing.

"This is not a cryptocurrency, this is a forward sale of Venezuelan oil," said legislator Jorge Millan at the time, calling it "tailor-made for corruption."

Additionally, on Jan. 22, U.S. Senators Marco Rubio and Robert Menendez denounced Venezuela's planned cryptocurrency in an open letter to U.S. Treasury Secretary Steven Mnuchin.

The two senators wanted to know how the department would move to prevent the country from using the petro to bypass U.S. sanctions.

They wrote:

"It is imperative that the U.S. Treasury Department is equipped with tools and enforcement mechanisms to combat the use of cryptocurrency to evade U.S. sanctions in general, and in this case in particular."

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.